Trading from levels: what you should know before applying it

Trading from levels: what you should know before applying it

When working on the financial market, your main goal would be to increase the capital. But do not forget that to do this, you need to save it for beginning, and only then to multiply it. In order for you to do this, you should competently manage the risks and always set a risk parameter in each transaction, i.e. a Stop Loss level.

The risk limitation allows you to stay in the game for a longer time and it contributes to the growth of profit. Ask yourself: how do I set the stop loss? If you do not have a clear answer, you should definitely write these conditions into your strategy.

Today, I will talk about a universal tool, which is a benchmark for stop loss exhibiting for the entire market – support and resistance levels. Moreover, these tools can be a separate trading strategy, after all the majority of exchange speculators take them into account in their trading.

Fix api trading from levels means to open trading positions based on significant support and resistance zones on the chart. This approach, as I already wrote above, is used for two purposes: opening transactions and installing SL / TP. The most important advantage of the level trading is ability to work based on several trading strategies at the same time. Thus, support and resistance levels allow you to trade at the exit, at the breakdown, and also directly in the lateral movement. Let’s look at these three strategies in more details.

On release

This tactic consists in opening trading positions at a time when the price is right up to one of the levels and the fix api trader receives a trading signal that the quotes may unfold on the basis of historical regular retreat. Then, a pending order for buying or selling (depending on the movement of quotations) is set, and the stop loss parameter is set immediately after the level. When the price approaches the level, the transaction will open. If the quotes close, below/above the support/resistance level, this will indicate a change in trend and breakout, and the trader will have a short stop loss. This approach is acceptable in the fact that the profit and loss ratio is very high, because SL is set at 10-15 points from the price of asset opening in the fix apiforex market.

At breakdown

This technique is inverse to the first, which we already considered. If the quotes move toward the level and are fixed above these marks, this is perceived by the market as a trend change and a new opportunity for making long-term deals. Thus, trading operations take place after the fact of level breakdown, and the Stop Loss risk limit parameter has more value in points than in trading on rebound. The goal here may be the level of the older period or the target Fibonacci markings (https://www.mathsisfun.com/numbers/fibonacci-sequence.html ).

Trading from levels in lateral movement

This is somewhat a subspecies of the rebound from the levels, but the very process of trading is conducted in a low liquid market, which allows you to extract additional profits at the moment of weak movements. The specificconsists in opening a large number of positions on the same marks, which allows you to trade using pending orders. Transactions are also opened when the level reaches the opposite direction, and the reverse side of this side plays a role of target.

Despite the multifunctionality of this approach, I still recommend you to combine its signals with other analysis tools, such as technical indicators or fundamental indicators (http://forexrobotsreview.eu/2017/06/07/analysis/). This will add a few test conditions before opening trading positions, and will also become an additional filter in the final decision making.